Quick overview

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Apple released a better-than-expected revenue forecast for the current period after outperforming on sales and earnings in the fiscal second quarter. During prolonged trading, the stock increased by roughly 3%. The only notable figure in Thursday’s report that fell short of expectations was iPhone sales, which missed projections for the second time in three quarters.

According to Apple, revenue increased by 17% from $95.4 billion in the previous year. It was the company’s first encounter with Wall Street since Tim Cook announced last week that he would leave his position as CEO after 15 years. During the earnings call, Apple stated that revenue for the June quarter will rise by 14% to 17% over the same period last year.

Analysts anticipated growth of 9.5 percent to $103 billion. The company announced a cash dividend of 27 cents per share, an increase of 4%, and approved an additional $100 billion in stock repurchases. Compared to a year ago, iPhone sales increased by 22% during the quarter.

Apple, like other manufacturers of consumer electronics and devices, confronted with supply chain issues, primarily because of the scarcity of memory chips caused by rapidly increasing demand for artificial intelligence. On Wednesday, Meta and Microsoft announced that their higher capital expenditure projections for the year

Cook informed investors that the memory crunch is not going away, despite providing optimistic revenue projections.

According to him, the impact was “minimal” in the December quarter and somewhat greater in the March period. Cook stated that “we expect significantly higher memory costs” in the current quarter. Beyond that, he stated, “we believe memory costs will drive an increasing impact on our business,” which will prompt the business to “look at a range of options.”.

Apple unveiled several new products in March, such as the iPhone 17e, an upgraded iPad Air laptop with an M4 chip available in 11- and 13-inch sizes. Additionally, it introduced the MacBook Neo, a low-cost laptop targeted at students and consumers on a tight budget that costs $599.

Wall Street’s top concern is what to anticipate from incoming CEO John Ternus, even though device sales are always crucial to Apple’s performance. Ternus will take over for Cook, who will become executive chairman in September, according to an announcement made by Apple

One of the first things Ternus needs to determine is Apple’s AI strategy. Apple declared early in the quarter that it would collaborate with Google to power its Siri product with its Gemini AI model. Cook stated that “the collaboration with Google is going well” and that the company is “happy with where things are, and we’re happy with the work that we’re doing independently as well” during the Q&A portion of the earnings call. The quarter’s services revenue increased by roughly 16% from $26.65 billion in the same period last year.

Apple leverages its enormous customer base to sell subscriptions to entertainment services. With more than 2.5 billion active devices on the market,, iCloud, Apple Pay, and AppleCare. Apple’s profit margins have increased due to the expansion of its services. Apple’s gross margin, which has been stuck in the high 30s for a long time, has been gradually increasing over the past few years, rising from 48.2 percent to 49.3 percent in the most recent quarter